CFTC Appeals Court Ruling Allowing Kalshi to List Election Betting Contracts

The U.S. Commodities Futures Trading Commission (CFTC) is challenging a court decision that allowed Kalshi, a prediction market platform, to offer betting contracts on political events. On October 16, the CFTC filed an appeal to the Washington, DC Court of Appeals, arguing that the lower court “erred at every turn” when it ruled in favor of Kalshi’s right to list election-related contracts.

The CFTC contends that the federal court misinterpreted key terms under the Commodity Exchange Act (CEA), including the definitions of “gaming” and “event-based” contracts.

According to the regulator, these contracts resemble gambling and should be barred from U.S. markets. Kalshi, however, has continued to list election betting contracts, offering odds on outcomes such as the presidential race and state-level margins of victory, after securing a legal victory in September.

CFTC Fights Back on Election Odds Contracts

Kalshi initially sued the CFTC in November 2023, seeking to overturn the regulator’s decision to block the platform from listing political event contracts. The Washington, DC federal court sided with Kalshi in September 2024, preventing the CFTC from imposing restrictions. However, the CFTC swiftly appealed the ruling, filing an emergency stay in early October to delay Kalshi’s ability to list the contracts while the appeal is ongoing.

In its October filing, the CFTC argued that the court’s decision ignored the legal basis of the CEA and hindered the regulator’s capacity to properly assess transactions on the platform. The CFTC insists that Kalshi’s election contracts blur the line between legitimate market offerings and gambling, a concern that could have broader implications for the U.S. regulatory landscape.

Kalshi Expands Betting

Despite the CFTC’s opposition, Kalshi has moved forward with listing several high-profile election betting markets. These include contracts on the 2024 U.S. presidential election, the popular vote outcome, and state-by-state election odds. The CFTC’s most recent filing, however, warns that Kalshi’s offerings could introduce a gambling-like element into the market, with further legal action possible depending on the outcome of the appeal.

The final ruling on the CFTC’s appeal is expected after December 6, with Kalshi’s future in the political betting space hanging in the balance. While the legal battle continues, other platforms, such as Polymarket, have already capitalized on the growing interest in political betting.